Eurozone inflation rose to 3.8% in September 2026, according to the flash estimate released today, October 2, versus 3.6% expected and 3.2% in August. It is the highest level in three years and is mainly driven by energy, up 18.8% year on year. Core inflation, excluding energy and food, held at 2.5%.
The figure strengthens the case for another European Central Bank (ECB) hike on October 29. But the euro isn't celebrating: EUR/USD remains around 1.1235, at multi-month lows, because the market sees expensive energy more as a brake on Europe than a reason to buy euros.
Eurozone inflation in September 2026: the data
| Indicator (y/y) | September | Forecast | August |
|---|---|---|---|
| Headline inflation | 3.8% | 3.6% | 3.2% |
| Core inflation (ex energy, food, alcohol and tobacco) | 2.5% | 2.5% | 2.4% |
| Energy | 18.8% | — | 14.3% |
| Services | 3.2% | — | 3.0% |
| Food, alcohol and tobacco | 1.4% | — | 1.1% |
| Non-energy industrial goods | 1.1% | — | 1.2% |
Flash estimate released on October 2, 2026 at 5:00 a.m. ET (10:00 in London). The final figure is due in mid-October.
Energy alone contributes about 1.7 points of the 3.8. Without it, inflation would be close to the ECB's 2% target. That is why core inflation, the measure the central bank watches most closely, barely moved.
Why is inflation rising so much in Europe?
Because of energy prices. The war with Iran has pushed oil higher (Brent is hovering around $100 a barrel) and Europe is also going through a diesel crisis: in the UK, the price per litre hit a record £2 today. Energy inflation went from 14.3% in August to 18.8% in September.
Two details matter:
- Services are rising too (from 3.0% to 3.2%). This is the stickiest part of inflation, because it depends on wages. If it keeps climbing, the ECB will have less room to wait.
- Non-energy goods are easing (from 1.2% to 1.1%). That suggests expensive energy is not, for now, spreading to everything else.
Inflation by country
The gaps inside the eurozone are large. Lithuania (6.1%), Bulgaria (5.6%), Cyprus and Luxembourg (5.2%), Greece (5.1%) and Spain (5.0%) lead. Italy posts 4.1%, France 3.4% and Germany 3.3%. The lowest are Malta (2.4%), Finland (2.6%) and Latvia (2.9%).
Will the ECB raise rates in October?
Most likely. The ECB has already hiked twice since the war began, most recently on September 10, when it lifted the deposit rate to 2.50% and warned that inflation would stay well above 2% for some time. After today's data, the market sees a very high probability, around 90%, of another 25 basis point hike at the October 28–29 meeting.
The question is what comes next. With core at 2.5%, some ECB officials may argue that one more hike is enough and that it is better to wait for oil to fall. If services keep rising, the door to further hikes in 2027 would stay open.
Why isn't the euro rising with inflation at 3.8%?
Because an ECB hike is almost fully priced in and because the market compares Europe with the US. The Fed also hiked in September, and the US 10-year yield is around 5.24%, near two-decade highs. That yield gap still favours the dollar.
On top of that, energy-driven inflation is bad news for the European economy, which imports almost all of its oil and gas. The US is a producer and suffers less. That is why EUR/USD has been falling for weeks:
- It trades below its 20-, 50- and 200-day averages (1.1422, 1.1489 and 1.1583).
- Its daily RSI is at 18, extreme oversold territory.
- The dollar index hit 102.18 yesterday, a 2026 high, and is at 102.03 today.
Today's levels are on our EUR/USD today page: pivot at 1.1232–1.1236, resistance at 1.1247–1.1250 and support at 1.1215–1.1223.
What it means for gold and emerging-market currencies
- Gold: high inflation worldwide keeps central banks hiking, and that weighs on gold, which pays no interest. Today it holds in the 4,176–4,196 area ahead of payrolls. We track it on gold price today.
- Latin American currencies: a strong dollar puts pressure on the Mexican peso (18.30 per dollar), the Colombian peso (3,325) and the Chilean peso (985). We explain it in why the dollar is rising against the region's pesos.
- Imported inflation: if oil stays expensive, other regions feel it too in fuel and transport costs, as Colombia did, where the central bank raised rates to 12.25%.
EUR/USD scenarios
Bullish scenario (bounce): if today's payrolls disappoint and the pair reclaims 1.1250 on a 1-hour close, oversold conditions could give way to a bounce toward 1.1263–1.1267 and 1.1282–1.1297. A more hawkish ECB than expected on October 29 would reinforce it. Invalidation: losing 1.1215.
Bearish scenario (the trend): if payrolls come in strong and the pair loses 1.1215, the next target is 1.1200–1.1211, then 1.1150. Invalidation: a 4-hour close above 1.1297.
Frequently asked questions
What is eurozone inflation in September 2026?
3.8% year on year, according to the flash estimate released on October 2, 2026. It is the highest in three years and beats the 3.6% expected. In August it was 3.2%.
What is core inflation and what is it now?
It is inflation excluding energy, food, alcohol and tobacco, the most volatile prices. In September it was 2.5%, in line with expectations and just above August's 2.4%. The ECB watches it because it shows the underlying trend.
When is the next ECB meeting?
October 28–29, 2026; the decision is announced on Thursday the 29th. The deposit rate is at 2.50% and the market sees a very high probability of another 25 basis point hike.
How does US inflation compare with Europe?
In the US, August PCE inflation came in at 3% and the Fed is also raising rates. If the Fed hikes more than the ECB, the dollar stays strong. We cover it in US inflation in 2026.
